No paper, no cups: China’s local authorities further tighten their belts as coronavirus, tax cuts weigh heavy

Shandong province on China’s eastern coast plans to cut expenditures on non-essential items by as much as 60 per cent on top of budget cuts already announced

China’s economy rebounded in the second quarter, but government revenues have not fully recovered after cuts in taxes and fees aimed at boosting the economy

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In the first eight months of the year, combined central and local government revenues fell 7.5 per cent from a year earlier to 12.6 trillion yuan (US$4.6 trillion), according to the latest data from the Ministry of Finance. Photo: AP

Published: 6:15pm, 15 Oct 2020Updated: 10:59pm, 15 Oct 2020

Local governments across China have been forced to further tighten their belts this year because of the damage caused by the coronavirus pandemic, with one slashing non-essential items by as much as 60 per cent.

Shandong province on China’s eastern coast, one of most populous provinces with more than 100 million residents, confirmed over the weekend that it plans to cut expenditures on non-essential items by up to 60 per cent on top of budget cuts already announced at the beginning of the year.

The Shandong announcement came after Beijing called for governments at all levels to cut spending and preserve funding for key priorities such as employment projects and social security payments to help the economy recover.

While the Chinese economy rebounded to post growth of 3.2 per cent in the second quarter, government revenues have not fully bounced back after Beijing continued to order cuts in taxes and fees to boost the economic recovery.

Budget austerity measures have also been applied within the central government with its overall allocation this year for overseas trips, vehicles and receptions – known as the “three public consumptions” – cut by 32 per cent from 2019 to 5.5 billion yuan (US$2 billion), the Ministry of Finance said.

The Ministry of Finance itself cut its own allowance for the same budget line by 30 million yuan, a drop of 55 per cent.

In Shandong, the third largest provincial economy after Guangdong and Jiangsu in terms of gross domestic product last year, the government rolled back spending on the same three public consumption categories by 10 per cent in February before cutting trips by an additional 30 per cent. It also cut receptions, conferences and training by another 60 per cent.

The Shandong government also froze spending for purchasing new vehicles and computers as well as on the recruitment of non-staff employees. It also cut back office building maintenance projects unless required for safety.

China State Finance, a magazine run by the Ministry of Finance, reported last month that government employees had been instructed to avoid business trips as much as possible, reduce their paper usage and also bring their own cups to the office.